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Current situation results in new highs for the Stifel Logistics Confidence Index

Improvements in the Stifel Logistics Confidence Index continued into November as the overall index climbed 2.5 index points to 57.1. The index has remained above the 50 level since February and not only is it at its highest level but it is also the first time that the individual air and sea indices are above the 50-level.

Perhaps the strong increase in the overall index may be attributed to improving economic conditions in Europe.

The airfreight index posted strong gains for the month. For the current situation, the index noted a 2.8 point jump from October to 50.9. As previously stated, the airfreight index climbed into expansion territory and in fact, it is the first time it has done so since the Logistics Confidence Index began.

By trade lane, the US to Europe lane is the only one remaining below the 50-level and it declined 1.0 points to 44.4 while the Europe to US lane increased 1.8 points to 53.7. Meanwhile, the Europe to Asia lane reported the biggest gain, 5.3 points to 51.8 followed by Asia to Europe climbing 4.7 points to 53.2.

The Logistics Confidence index six month outlook slowed a bit, increasing only 0.4 points. While all lanes remain above the 50-level, forwarders were least optimistic on the US lanes. Sentiment on the US to Europe lane increased only 0.6 points while there was a 2.0 point decline for the Europe to US lane.

The overall sea freight index noted a 3.3 point increase to 57.9. A strong increase was noted in the present situation increasing 6.6 points to 53.7. However, the expectations for the next six months were about the same as in October, slipping 0.1 points to 62.0. For the present situation, all lanes except the US to Europe lane noted very good increases. The US to Europe lane increased only 0.2 points to 54.3. The six month outlook was mixed as the Asian lanes noted increases while the US ones declined.

The US-Europe trade lane continues to struggle for both air and sea forwarders. This may be due to the still weak European economy as well as the US partial government shutdown in October.

In this month’s unique question, we asked survey participants if sea freight rates had bottomed out. 42.3% of respondents indicated no while 33.1% were unsure and 24.6% indicated they felt rates had indeed bottomed out. Respondents commented that the P3 alliance, set to begin in 2014, will likely play a major role in rates as well as on capacity. For some respondents, rates on established lanes appear to have bottomed out while those on “new” or emerging lanes remain high.

Although only increasing 0.1 points, the Logistics Confidence Index expectations for the next six months, still remains optimistic climbing to 61.8. Air and sea volumes appear to be expanding as economies slowly improve.

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